Motilal Oswal set to raise $300 million for third PE fund

The new fund will invest between $10 million and $20 million mostly in unlisted firms. Most of these investments will be for a significant minority stake, Tulsyan said.Indulal PM | ET Bureau | June 29, 2016, 08:01 IST

The new fund will be the third from the Mumbai-based firm, which has almost fully invested the capital it raised for the previous funds, its top executive said. “We are in talks and probably within next couple of months, we will be launching our fresh fund,” Vishal Tulsyan, CEO of private equity business at Motilal Oswal told ET. “We could deliver decent returns from the previous funds and we believe its an appropriate time to launch a fresh one.”

Motilal Oswal Private Equity had raised its maiden fund of $125 million in 2007-08 and another $155 million three years ago. The first has been completely deployed while the second is almost fully utilised.

“The strategy would be to provide growth capital and we will be targeting the mid-market segment on Indian growth story. We have a full-fledged financial services business and the alternate asset business will comply with overall strategy of the group,” he said.

The first fund as made an average of 2.5x return while Motilal is yet to start exits from the second fund, he said. Investments from its earlier fund include a 35% stake in Jaipur-based non-banking financial services firm Au Financiers, a 15% stake in Parag Milk Foods, a Rs 98 crore bet on IEX, and a Rs 85 crore bet on mattress maker Kurlon.

The new fund will invest between $10 million and $20 million mostly in unlisted firms. Most of these investments will be for a significant minority stake, Tulsyan said. “However, we are not averse to taking control and definitely we will be exploring such opportunities from the fresh fund.”

Motilal would be the fifth domestic private equity fund in the market to raise capital for India investments this year. A large group of Indian funds, including Multiples Asset Management, IDFC Alternatives, Tano Capital and Baring Private Equity (India), are in the process of raising fresh funds.

As many as 28 dedicated funds focusing on India-specific investments managed to raise $3.8 billion across venture capital, real estate and private equity funds last year, according to data compiled by VCCircle.

Earlier this year, ICICI Venture and Gaja Capital had raised $190 million and $240 million, respectively, for their latest funds. The amount stands the highest ever since the 2008 financial crisis as overseas limited partners see India as an attractive investment destination, analysts said.